Tax Jurisdiction and Insurance

For businesses in the insurance, electric and gas utilities, telecommunications, retail operations and services – determining tax jurisdiction can be a difficult and cumbersome task.

It’s a challenge for businesses because most companies rely on determining tax jurisdiction at the ZIP Code level. This can be a problem because some ZIP codes cross multiple boundary and county lines, some municipal boundaries change, and not all ZIP codes fall into a specific tax district. In addition, some businesses have contact data that contains incomplete addresses, misspelled street names and missing ZIP codes.

The most effective way to accurately determine tax jurisdiction is to integrate geocoding technology – along with an address quality solution – into your operations.

Geocoding addresses to at least the ZIP+4 level or higher will provide businesses with the location intelligence needed to accurately determine tax jurisdiction.

The most precise method for determining tax jurisdictions is doorstop geocoding, giving the actual physical location of a building or parcel. Without this data, businesses are at risk for penalties, fines and other costs if they inaccurately determine tax jurisdiction. Some businesses also rely on locale specific sales tax areas which is determined using the Census Place Code and Place Name from a good geocoding solution.

More and more insurance companies rely on geocoding to help set premiums and make underwriting decisions based on the physical location of the insured property.

Most insurance carriers have their own set of rules and criteria when it comes to underwriting, such as property elevation, and determining the distance of the property from/to the coast. Such an imprecise standard may leave carriers with unknown risks – exposing them to potential payouts to insured properties.

And the same could be said in a reverse situation – carriers might even turn down properties that are located within a short distance from the shoreline – yet are not in a storm-surge zone. This is why accurately determining the insured’s precise location and attaching the appropriate risk is imperative or a carrier could stand to lose millions.

Back to Point A to Point B: Different Geocoding Approaches